US commerce dept preliminary ruling significantly lowers Canada’s softwood lumber duty
By Madison's Lumber Reporter
By Madison's Lumber Reporter
As the softwood lumber dispute V file winds its way through the usual U.S. domestic as well as international trade court tribunals, a preliminary ruling Monday from the U.S. commerce department brings a sharp reduction in the duty rates paid on Canadian softwood lumber entering the U.S. All companies named, as well as the group “all others” category – except Resolute Forest Products – will likely be paying much less on their wood sold into the U.S. come August 2020.
The commerce department will be releasing reasons for this ruling “within a few days”. In August will be the final ruling, and soon after the new, lower, duties will take effect.
Do the Canadian companies receive back the amount over this preliminary ruling they have paid so far, since the duty was put in place? Good question, that is just one of the many entanglements of a complicated trade file like softwood lumber. The other, something new, currently afoot is that the international tribunal for softwood lumber at the World Trade Organization (WTO) is stymied since December 2019 due to refusal by the U.S. to appoint new arbitrator judges. Another working softwood lumber retired, leaving only three judges on that panel. It’s supposed to be a minimum of five.
This arbitration was quite close to nearing conclusion in Q3 2019; that’s one of the reasons it was allowed to go on with only four judges. At last update, it is unknown if the WTO will be continuing with the ongoing Canada-U.S. softwood lumber arbitration in international trade court.
In week ending January 31, 2020, benchmark North American construction framing lumber item Western Spruce-Pine-Fir KD 2×4 #2&Btr (RL) prices popped up by +$6, or +1.5%, compared to the previous week, to US$408 mfbm. This week’s price is +$10, or +2.5%, more than it was one month ago. At this time last year this price was falling, so is now only up by +$4, or +1% compared to the end of January 2019, a significant drop from recent trend.
On February 3, 2020, the U.S. Department of Commerce released its preliminary determination for the First Administrative Review (AR1) in antidumping duty (AD) and countervailing duty (CVD) investigations of imports of certain softwood lumber products from Canada.
The final determination by the U.S. commerce department on Canada’s softwood lumber duty rate will be in August. At that time duty rates could be lowered to:
- 9.08 per cent from 23.56 per cent for West Fraser
- 4.63 per cent from 20.52 per cent at Canfor
- 15.84 per cent from 17.90 per cent at Resolute Forest Products
- 4.32 per cent from 9.38 per cent at J.D. Irving
- 8.21 per cent for “all others”
Be ahead of these data releases … Don’t delay, this week’s softwood lumber market comment was published to the website Monday morning.
* Madison’s Lumber Prices, weekly, are a good forecast indicator of US home builder’s current lumber buying activity.
Another week of strong demand capped off an encouraging first month of 2020. – Madison’s Lumber Reporter
Compared to historical trend, last week’s WSPF 2×4 #2&Btr price kept rising, this time up by +$32, or +8.5%, relative to the 1-year rolling average price of US$376 mfbm, but are down -$25, or -6%, relative to the 2-year rolling average price of US$433 mfbm. This week’s price is up +$33, or +9% relative to the 5-year rolling average price of US$375 mfbm.
Momentum of demand from the previous week carried into the end of January, rounding out a solid month of sales activity for the US WSPF market. Pockets of cold weather afflicted certain areas, but comparatively balmy conditions were also found in some target markets and buyers continued to take away good volumes each day. Construction activity was surprisingly strong considering the time of year. Producers extended their sawmill order files into late-February on a handful of items, as earlier-availability dried up on others. Players agreed that 2020 has kicked off in a much more encouraging fashion than 2019.
The below table is a comparison of recent highs, in June 2018, and current February 2020 benchmark dimension softwood lumber 2×4 prices compared to historical highs of 2004/05 and compared to recent lows of Sept 2015: